London’s Crossrail scheme this week faced a major setback after communities secretary Hazel Blears insisted that businesses get to vote on whether they should fund up to £3.5bn of the £16bn project.
If such a vote went against the agreed funding package, the project could collapse. Blears’ plan has put her on a collision course with the Cabinet and Conservative London mayor Boris Johnson.
Her department is planning changes to the Business Rate Supplements Bill at the committee stage in the House of Lords. If agreed, they could allow businesses a vote on their Crossrail contributions.
The Bill could allow local authorities to raise additional funds to a maximum of 2p in the pound for large construction schemes. In London the money will be raised by the mayor, while in the rest of the country the money will be raised by local authorities.
As it stands, the legislation would give businesses the right to vote on whether they contribute if money raised is more than onethird of a scheme’s total cost.
At present Crossrail falls outside this, but Blears’ Department for Communities and Local Government (DCLG) is understood to be keen to lower the threshold to bring the legislation back into line with Sir Michael Lyon’s review of local government finance.
Lyons’ review advocated giving local authorities fund raising powers but said that businesses should have some say on how much they have to pay.
“The most obvious options are some form of voted approval or a statutory consultation process,” it says. “There should be a requirement to consult local businesses, and the wider community before introducing a supplement, with a clear proposal and timetable.”
A DCLG spokesman said: “The assessment of whether there should be a ballot of business is for the levying authority to conduct and should be taken once the Bill has completed its passage through the House and the associated guidance concerning ballots is finalised and published.
“The Bill as currently drafted requires businesses to be balloted if total Business Rate Supplement revenue will support more than a third of total project costs,” she said.
A spokesman for business lobby group London First expressed concern that the new legislation could delay Crossrail after funding had been agreed.
“If we were sitting in front of a blank sheet of paper, we would have preferred a specific piece of legislation for Crossrail. “Here, national and local issues are conflated on an otherwise agreed project. “In the meantime, we advocated the bill going through in its current form, but the criterion in the Bill says if business rates are to pay for more than one-third of a project, then you need a vote. That is designed to give Crossrail the go ahead.
“Business is in favour, but it is a bad time to be asking. But nothing needs to be paid until next year, and payments would be spread over several years. “Going back to square one is not a good idea because of the delays it could introduce,” he said.
To make a credible ballot, a roll of businesses who pay more than £50,000 in business rates would need to be created, and rules for voting drawn-up.